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BRIAN HOOPS

By Staff | Oct 30, 2015

Farm rents

Farmland rental rates for next year are not much less than current rates.

“In South Dakota, western Minnesota and North Dakota, we’ve negotiated about one-third of our leases,” said Terry Longtin, Upper Midwest operations manager, Farmers National Co. “Rents are renewing, for the most part, at the same rate to a 5 percent reduction.”

Longtin said most operators are trying to stay away from crop share rents. The exception might be the landlord who has a large operation with a bin setup.

Raw milk

A dispute between a Cook County dairy farmer and the Minnesota Department of Agriculture is in the courts.

David and Heidi Berglund sell unpasteurized, raw milk directly to consumers and has refused to allow state officials from inspecting his farm.

An attorney representing the farm claims this is an issue of individual contract rights.

The Minnesota Department of Agriculture is defending its authority to inspect all of the dairy farms in the state.

A decision has not yet been made in this case.

Wells Fargo 3Q

Wells Fargo finished the third quarter with net income of $5.8 billion, up 1 percent from a year ago.

According to the American Bankers Association, Wells Fargo is the largest agricultural bank in the U.S. with more than $7 billion in farm loans.

Transaction fees

The CME Group Inc., plans to raise transaction fees on a host of products starting Jan. 1, 2016, pending regulatory approval, the exchange said.

Fees for members to trade agricultural options on CME’s electronic Globex platform will rise to 36 cents, from the current level of 25 cents, to match fees on agricultural futures.

Non-member fees on agricultural options traded on Globex will rise to $1.34, matching the fees on ag futures, from the current 70 cents.

Fees are assessed per contract, against both buyer and seller.

The proposed fee changes must be approved by the U.S. Commodity Futures Trading Commission.

CORN ANALYSIS

Corn closed the week 2.75 cents higher.

Last week, private exporters reported sale of 130,000 metric tons of corn to an unknown destination.

Weekly export sales showed corn sales were only 9.8 million bushels for corn.

Sales are 468 mb, or down 251 mb, from last year’s pace.

In the weekly crop progress and conditions report, the USDA reported U.S. corn harvest at 59 percent complete, near expectations.

For this time of year we are typically about 68 percent complete. Last year we were only 30 percent done.

Iowa is 52 percent harvested, Minnesota 58 percent and Nebraska 40 percent.

The lack of storage in the western Corn Belt should pressure basis levels during the next two to three weeks.

As we suspected, corn looks to have entered into a technical downtrend as the technicals match up with the bearish fundamental picture.

Prices look poised to test weekly support between $3.61 and $3.65 under the weight of the final stages of harvest pressure.

Seasonals turn higher by early December, suggesting a post-harvest rally that includes a tighter basis is likely into the end of the year.

Strategy and outlook: Producers:

  • Are 100 percent sold of the 2014/15 crop.
  • Sold 50 percent of 2015 production and own December puts on balance of production.
  • Will exit puts when December hits $3.65.
  • Sold 20 percent of 2016 crop.

SOYBEANS ANALYSIS

Soybeans closed the week 7.25 cents lower.

Last week, private exporters announced sales of 370,000 mt of soybeans to China, 670,000 mt of soybeans to an unknown destination, 20,000 mt of bean oil to an unknown destination and 20,000 mt of bean oil to China.

Weekly export sales of new crop soybeans were an outstanding 74.6 mb. The export pace of the 2015/16 marketing year now stands at 932.5 mb, or down 270 mb from last year’s pace.

The weekly crop progress report saw U.S. soybean harvest came in at 77 percent complete, right in line with expectations.

The average progress for this time of year is 68 percent. Last year we were 51 percent complete.

The market focus has shifted from supply to demand, which has been supportive of soybean values.

Looking ahead to the November report, October to November yields have increased in four of the last six years and trade has underestimated November soybean production in three of the last six years.

November to final soybean production has increased in six of the last seven years. Using USDA’s current ending stocks estimate of 425 mb, U.S. soybean stocks would be double the level of any years’ stocks in the U.S. over the last eight years.

This looks to increase in subsequent reports as the USDA will increase yield forecasts with 450 mb to 500 mb carryout likely by the January final report.

Strategy and outlook: Producers:

  • Are 70 percent sold of 2015/16 production and own November puts on balance of production.
  • Will roll puts to January options.
  • Will sell 20 percent at $9.50.
  • Sold 20 percent of 2016 November.

This material has been prepared by a sales or trading employee or agent of Midwest Market Solutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solution’s Research Department. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Midwest Market Solutions believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such.

Brian Hoops can be reached at (605) 660-1155.

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